The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) and the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) are both among the Top 100 ETFs. IGSB is a iShares Short-Term Bond fund and VTIP is a Vanguard Inflation-Protected Bond fund. So, what’s the difference between IGSB and VTIP? And which fund is better?
The expense ratio of IGSB is 0.01 percentage points higher than VTIP’s (0.06% vs. 0.05%). IGSB is mostly comprised of BBB bonds and VTIP has a high exposure to AAA bond. Overall, IGSB has provided higher returns than VTIP over the past 7 years.
In this article, we’ll compare IGSB vs. VTIP. We’ll look at portfolio growth and industry exposure, as well as at their performance and holdings. Moreover, I’ll also discuss IGSB’s and VTIP’s risk metrics, fund composition, and annual returns and examine how these affect their overall returns.
Summary
| IGSB | VTIP | |
| Name | iShares 1-5 Year Investment Grade Corporate Bond ETF | Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares |
| Category | Short-Term Bond | Inflation-Protected Bond |
| Issuer | iShares | Vanguard |
| AUM | 26.63B | 50.67B |
| Avg. Return | 2.51% | 1.79% |
| Div. Yield | 2.02% | 1.35% |
| Expense Ratio | 0.06% | 0.05% |
The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) is a Short-Term Bond fund that is issued by iShares. It currently has 26.63B total assets under management and has yielded an average annual return of 2.51% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.06%.
The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) is a Inflation-Protected Bond fund that is issued by Vanguard. It currently has 50.67B total assets under management and has yielded an average annual return of 1.79% over the past 10 years. The fund has a dividend yield of 1.35% with an expense ratio of 0.05%.
IGSB’s dividend yield is 0.67% higher than that of VTIP (2.02% vs. 1.35%). Also, IGSB yielded on average 0.71% more per year over the past decade (2.51% vs. 1.79%). The expense ratio of IGSB is 0.01 percentage points higher than VTIP’s (0.06% vs. 0.05%).
Fund Composition
Holdings
| IGSB Bond Sectors | Weight |
| BBB | 50.48% |
| A | 40.04% |
| AA | 7.46% |
| AAA | 2.21% |
| BB | 0.09% |
| Below B | 0.0% |
| B | 0.0% |
| US Government | 0.0% |
| Others | -0.28% |
IGSB’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.48%, 40.04%, 7.46%, 2.21%, and 0.09%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.
| VTIP Bond Sectors | Weight |
| AAA | 99.87% |
| Others | 0.13% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
VTIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.87%, 0.13%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
Risk Analysis
| IGSB | VTIP | |
| Mean Return | 0.19 | 0 |
| R-squared | 26.13 | 0 |
| Std. Deviation | 2 | 0 |
| Alpha | 0.69 | 0 |
| Beta | 0.34 | 0 |
| Sharpe Ratio | 0.82 | 0 |
| Treynor Ratio | 4.82 | 0 |
The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Alpha of 0.69 with a Standard Deviation of 2 and a Beta of 0.34. Its Treynor Ratio is 4.82 while IGSB’s Sharpe Ratio is 0.82. Furthermore, the fund has a R-squared of 26.13 and a Mean Return of 0.19.
The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) has a Treynor Ratio of 0 with a Standard Deviation of 0 and a Alpha of 0. Its R-squared is 0 while VTIP’s Mean Return is 0. Furthermore, the fund has a Beta of 0 and a Sharpe Ratio of 0.
IGSB’s Mean Return is 0.19 points higher than that of VTIP and its R-squared is 26.13 points higher. With a Standard Deviation of 2, IGSB is slightly more volatile than VTIP. The Alpha and Beta of IGSB are 0.69 points higher and 0.34 points higher than VTIP’s Alpha and Beta.
Performance
Annual Returns
| Year | IGSB | VTIP |
| 2020 | 5.26% | 4.97% |
| 2019 | 7.01% | 4.83% |
| 2018 | 1.34% | 0.54% |
| 2017 | 1.41% | 0.82% |
| 2016 | 1.77% | 2.71% |
| 2015 | 0.7% | -0.15% |
| 2014 | 0.74% | -1.17% |
| 2013 | 1.03% | -1.55% |
| 2012 | 3.28% | 0.0% |
| 2011 | 1.34% | 0.0% |
| 2010 | 3.69% | 0.0% |
IGSB had its best year in 2019 with an annual return of 7.01%. IGSB’s worst year over the past decade yielded 0.7% and occurred in 2015. In most years the iShares 1-5 Year Investment Grade Corporate Bond ETF provided moderate returns such as in 2011, 2017, and 2016 where annual returns amounted to 1.34%, 1.41%, and 1.77% respectively.
The year 2020 was the strongest year for VTIP, returning 4.97% on an annual basis. The poorest year for VTIP in the last ten years was 2013, with a yield of -1.55%. Most years the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares has given investors modest returns, such as in 2011, 2010, and 2018, when gains were 0.0%, 0.0%, and 0.54% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IGSB | $10,000 | $11,950 | 2.51% |
| VTIP | $10,000 | $11,305 | 1.79% |
A $10,000 investment in IGSB would have resulted in a final balance of $11,950. This is a profit of $1,950 over 7 years and amounts to a compound annual growth rate (CAGR) of 2.51%.
With a $10,000 investment in VTIP, the end total would have been $11,305. This equates to a $1,305 profit over 7 years and a compound annual growth rate (CAGR) of 1.79%.
IGSB’s CAGR is 0.71 percentage points higher than that of VTIP and as a result, would have yielded $645 more on a $10,000 investment. Thus, IGSB outperformed VTIP by 0.71% annually.
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